Eigenlayer Slashing Update

Implementation of dynamic withdrawal synchronization and updated balance tracking for YieldNest to be compatible with Eigenlayer "Slashing" protocol upgrade deployed to Mainnet on April 17, 2025. Ensuring fair withdrawals, accurate accounting, and full alignment with EigenLayer’s evolving security model.

Challenge

EigenLayer was scheduled to deploy its Slashing Upgrade to mainnet on April 17, 2025. This upgrade, outlined in EigenLayer Improvement Proposal-002 (ELIP-002), introduced mechanisms for Autonomous Verifiable Services (AVSs) to enforce cryptoeconomic commitments through slashing, enhancing security and accountability in the EigenLayer ecosystem.

However, the upgrade posed critical challenges for YieldNest’s protocol, particularly in two areas:

Breaking changes to EigenLayer contracts: Function signatures used by YieldNest contracts were modified or removed, causing calls to revert and rendering existing integrations incompatible.
Incorrect balance accounting: YieldNest's smart contracts did not account for slashed assets, resulting in overstated protocol balances and preventing users from accurately withdrawing their share of assets.

These issues required significant updates to ensure compatibility and safeguard user funds post-upgrade.

Solution

Changes to Balance Tracking. We updated balance tracking logic to only reflect withdrawable (non-slashed) assets, excluding any funds that have been slashed due to operator misbehavior. Our revised approach ensures that slashed assets are no longer included in reported balances, offering a more accurate and secure reflection of user holdings.

Impact on Withdrawals. We introduced a real-time synchronization mechanism to update queued withdrawal shares whenever a slashing event occurs. This ensures that only non-slashed shares are reflected in the platform's balance and are ultimately eligible for withdrawal.

By implementing dynamic withdrawal synchronization and updated balance tracking, YieldNest remains resilient and user-focused in a post-slashing environment—ensuring fair withdrawals, accurate accounting, and full alignment with EigenLayer’s evolving security model.

The biggest challenge was to keep updating YieldNest contracts compatible with new versions of Eigenlayer contracts as they were released until the final version was confirmed.

Contributions

Smart Contract Development, Testing, Documentation

Outcome

Code with required changes ready by the time Eigenlayer Slaching went to Mainnet.

Protocol continued operations without disruptions.

User experience stayed consistent.

Dan Octavian

CTO @ YieldNest

"Having worked with BootNode engineers before, we reached out again to integrate the new Eigenlayer slashing mechanism into our LRT balance tracking and withdrawals. It wasn't a straightforward task, but we managed to get the working code in time, worked closely with the EL Engineering team to coordinate deployment as the EL protocol went to production and kept the protocol operational thanks to smooth collaboration, technical expertise and dedication of the BootNode team!"